how do they decide the interest rate for auto loan

[eazy_money]

Is there any other factor besides my credit score that decides my interest rate?

[MarvBear]

Welcome to CreditBoards! We hope that you find what you're looking for here.

 

Some helpful tips:

 

• Your post may not get a reply right away. Don't be discouraged, this is a very busy board. If it falls off of the first page, feel free
  to reply to your post yourself, with the word *bump* in the text. This will *bump* your post back up to the top of the board.
• If you haven't yet, take a peek at out Newbies Section.
  Everything that you need to know is in that forum, for the most part! It's a lot of reading, we know, but this credit stuff can have a steep learning curve. In no time, you'll be posting like the pros!
• If you find that someone is discourteous to you, use the REPORT button at the bottom of every post - that will ensure that a moderator or admin looks at the post and decides if it is against the TOS.
• Off -topic posts should go in the General Forum.

 

Again, welcome to the CreditBoards family!

 

CB Admin: LKH, Pam, radi8, breeze

CB Mods: CargoJon, Chris in OK, cotterpin, CramItCCCAs, Fallon, MarvBear, mpc578, pryan67, psp, Stryker, TrevorHere

Forum Leads: brazen, Brian B The Loan Professor, cedski, DallasLoanGuy, hoapres, ICANHASMUNY?, Lighthouse84, Linx04, Neen, TeeSharice

 

 

Come get your new keys!

 

HAPPY MOTORING

 

 

CB Admin: LKH, Pam, radi8, breeze

CB Mods: CargoJon, Chris in OK, cotterpin, CramItCCCAs, Fallon, MarvBear, mpc578, pryan67, psp, Stryker, TrevorHere

Forum Leads: brazen, Brian B The Loan Professor, cedski, DallasLoanGuy, hoapres, ICANHASMUNY?, Lighthouse84, Linx04, Neen, TeeSharice

[MarvBear]

yes

[brainchasm]

LOL.

 

<3 Marv

[YoYo18]

Yes. The Dealer.

 

Most auto financing is not done "in house", but rather as follows: The dealer sends in your credit app to a number of Banks/Finance Co's he's signed up with. They respond to him with an approval or denial, and an approval comes with a contract interest rate, for example 5% depoending on your credit rating/score (He requests the term).

 

He can then turn to you, tell you that you were approved at 9%, and have you sign a contract for 9%, and the difference in interest of the 4% over the life of the loan gets kicked back to the Dealer from the finance company/bank on the backend. (Sometins this kickback is a 75/25 split somrtimes its 100%).

 

I would ask the Dealer for the approval sheet, or better yet, negotiate a sales price on the car as a "cash sale", and arrange your own financing. there is a wealth of finance companies willing to finance dealer purchases (some, like cap1 will only finance apurchase froma new franchise dealer, and not from a used car store, others like penfed, chase, aaa, dont care.)

 

Good luck.

[MarvBear]

Yes. The Dealer.

 

Most auto financing is not done "in house", but rather as follows: The dealer sends in your credit app to a number of Banks/Finance Co's he's signed up with. They respond to him with an approval or denial, and an approval comes with a contract interest rate, for example 5% depoending on your credit rating/score (He requests the term).

 

He can then turn to you, tell you that you were approved at 9%, and have you sign a contract for 9%, and the difference in interest of the 4% over the life of the loan gets kicked back to the Dealer from the finance company/bank on the backend. (Sometins this kickback is a 75/25 split somrtimes its 100%).

 

I would ask the Dealer for the approval sheet, or better yet, negotiate a sales price on the car as a "cash sale", and arrange your own financing. there is a wealth of finance companies willing to finance dealer purchases (some, like cap1 will only finance apurchase froma new franchise dealer, and not from a used car store, others like penfed, chase, aaa, dont care.)

 

Good luck.

 

 

Your analogy is not correct in regard to the apr.

[mk_378]

Most states don't allow that much markup; some don't allow any at all. It can only happen when the buyer is overqualifed and doesn't realize it. A well-qualified buyer should know what their credit is worth and insist on a low APR (it's also possible to "buy down" the customer's APR by the dealer paying the finance company).

 

With very bad credit, often the opposite is true, if a finance company takes the loan at all they charge an "acquisition fee" which means that the lump sum they pay the dealer is less than the face value.